Croatian National Bank Governor Boris Vujčić has indicated a potential pause in interest rate hikes by the European Central Bank (ECB) at its upcoming meeting. In an interview with Handelsblatt, Vujčić suggested that the ECB should await further data releases before making a decision. He highlighted that key economic indicators, including inflation, economic performance and future prospects, would become available before the September meeting, providing a clearer picture of the appropriate course of action.
While market expectations anticipate a possible further rate adjustment between September and the end of the year, Vujčić characterized this expectation as “no problem.
The ECB has reduced the relevant deposit rate in the Eurozone eight times since summer 2023, bringing it to the current level of two percent – coincidentally matching the current inflation rate. Unlike some other central bankers, Vujčić does not express significant concern regarding the possibility of inflation falling below the target level. He views inflationary risks as relatively balanced, both upwards and downwards and argued that short-term fluctuations should not be a primary worry.
Reflecting on Croatia’s adoption of the Euro in 2023, Vujčić expressed a wholly positive assessment, stating that the country has yielded the expected benefits. He also dismissed the criticism that the shared currency contributes to a higher price level, describing this as a “widespread misconception” that is difficult to counter and explain.
